In Activity-based costing,the activity rates that are used to charge costs to each job are based on:
A)the direct labor hours incurred by each activity.
B)the number of units produced.
C)each activity's consumption of the resources required to sustain it.
D)volume related cost drivers.

Question

Quizplus · Accepted Answer

In Activity-based costing, the activity rates are based on each activity's consumption of the resources required to sustain it. This is because Activity-based costing recognizes that different activities consume different amounts of resources, and therefore, the costs associated with each activity should be allocated based on the resources they consume. This helps to provide a more accurate picture of the costs associated with each job, as opposed to just using direct labor hours or volume related cost drivers.

In Activity-Based Costing,the Activity Rates That Are Used to Charge